As U.S., Canadian Lawyers Wrangle, a Colorado Mine Emits Its Poisons

At first, the Justice Department gloated: In a rare victory in a Canadian court, it had succeeded in freezing $152 million in assets belonging to a flamboyant promoter linked to Colorado’s most polluted gold mine.

Authorities had hoped back in 1996 to use the funds to clean up the Summitville Mine, which threatened to spill 200 million gallons of water laced with cyanide and heavy metals into the streams and irrigation canals that nourish this poor farming community.

The tables turned a year ago, however, when an Ontario, Canada, court rejected the freeze, cited the United States for its “misstatements” against Robert Friedland and ordered the government to pay his court costs of about $1 million.

Although federal cleanup efforts are underway, contaminated water continues to drain from the site. And life in this dry, remote corner of the state is not the same.

What’s more, Friedland has filed a $150-million lawsuit--due to go to trial this month in Canada--against the United States, two Justice Department attorneys and a lawyer for the Environmental Protection Agency.

“For the first time, it appears the federal government has an adversary of equal mettle who won’t be swept off the plate by fastballs,” said Jim Pendleton, technical science coordinator for Colorado’s mined land reclamation division.

The suit alleges the defendants conspired to limit Friedland’s ability to do business, launched a libelous public relations campaign against him and withheld information from the court. The 48-year-old financier has offered to donate any monetary award to Canadian charities.

U.S. authorities counter that the United States as a sovereign entity is immune to the lawsuit and that the defendants were acting within the scope of their authority and employment as government agents.

They also allege that Friedland was the driving force behind the mine and therefore is responsible for the huge cleanup bill.

The mine’s parent companies, including Galactic Resources Ltd., declared bankruptcy in 1992. Galactic posted a $4.5-million bond to cover the cost of reclamation, but so far cleanup of what has become a major Superfund site has cost upward of $120 million.

As the costs mount, legal experts suggest that any action taken by authorities against Friedland could backfire and that his case raises the specter of other foreign-based mining operators filing suits to paralyze the U.S. authorities who target them.

“An obvious problem,” said Georgene Vairo, a professor at Loyola Law School in Los Angeles, “is that their actions could be construed as vengeance against him and therefore could be used against them in his lawsuit.”

“A case like this,” she added, “may have to be resolved at a higher level than the court system, perhaps at the diplomatic levels of the United States and Canada.”

In Capulin, residents must deal with the hardships of ranching and farming that remain six years after the Summitville mine collapsed.

Machinery and sprinklers built to last decades have corroded in a few years. Barley fields are showing rising levels of acidity. A few mountain streams are devoid of even water beetles. Some of the EPA’s efforts to clean up the mine site have increased the release of a stew of contaminants. And rust-colored snowmelt from Summitville and other abandoned mines have turned the Terrace Reservoir and a 17-mile stretch of the Alamosa River into biological deserts.

“Now it’s an orangish-, bluish-, yellowish-brown holding pond for gunk,” said activist Cindy Medina, looking across the reservoir. “I don’t think I’ll see fish in there again in my lifetime. Someone has to hold these mining companies accountable.”

Federal authorities don’t dispute that. The EPA has filed a civil suit against Friedland. And the Justice Department has launched a criminal investigation that has seen two former mine managers charged with conspiracy and environmental offenses.

Moreover, Galactic’s Summitville Consolidated Mining Co. was recently fined $20 million after it pleaded guilty to 40 counts of illegally discharging pollutants, violating the Clean Water Act, making false statements and conspiracy. But the firm has no assets.

People have been mining gold, silver, copper and lead in these parts since the 1870s. Summitville Consolidated made its mark in 1985 with an open-pit, cyanide-heap leach mine carved out of a mountainside 11,500 feet up.

Between 1985 and 1992, about 10 million tons of ore was mined, crushed and heaped onto a clay- and synthetic-lined pad. On the pad, a lattice of pipes sprinkled the ore with a solution of sodium cyanide. As the cyanide percolated through the rock, it picked up gold and carried it to the bottom.

The gold and cyanide solution was then pumped to a recovery plant, where the precious metal was separated out. The solution was recycled onto the pad.

But the Summitville operation had serious problems. Weather conditions at the remote site were treacherous. The leach pad leaked from the start. Consultants underestimated the amount of snowfall and overestimated the amount of evaporation.

By Dec. 15, 1992, when the subsidiary filed for bankruptcy, the EPA investigators feared a catastrophic release of cyanide solution was imminent.

Faced with increasing problems at Summitville, Friedland resigned as chairman of the board and chief executive officer of Galactic in 1990. But he continued to be involved as a shareholder.

Although he was only one of 40 potentially responsible parties--including Bechtel Corp. and Bank of America--federal authorities made him their solitary target for recovering cleanup costs. They focused on Friedland because of his alleged control over major decisions at the mining facility and its parent companies from 1984 to 1990. Friedland, they argued, had the authority to prevent operations that led to environmental contamination at the site.

In the summer of 1996, Lois Schiffer, assistant attorney general in charge of the Justice Department’s environmental and natural resources division, trumpeted the freezing of his assets in a press release that Canadian Judge Robert Sharpe would later find offensive.

“This extraordinary action will help assure that the polluter responsible for environmental contamination pays for cleaning it up,” Schiffer said. “Polluters are now on notice that they cannot create an environmental hazard in this country, then turn off the lights and walk across the border.”

Sharpe bristled over internal EPA documents obtained by Friedland’s attorneys concluding that he did not make key decisions at the mine. Sharpe determined that those documents had been wrongfully withheld.

“The government remains wedded to its one-man theory of liability, despite the fact that there were other parties involved at Summitville and other polluting mines in the region for more than 100 years,” said John Fognani, a Friedland lawyer.

In the meantime, people who till the San Luis Valley’s desert farms have been trying to carry on while authorities coax skip-loaders and big trucks up a narrow dirt road leading to the mine.

“What we saw here was a mining company allowed to pollute badly and regulatory agencies that seemed powerless to stop it,” said Jeff Stern, coordinator of the Alamosa River Watershed Project. “The lesson? Big industry and big government have to be watched carefully by responsible citizens.”

That might be the motto of Alan Miller, a fifth-generation alfalfa grower whose 500-acre spread straddles the Alamosa River.

Buffeted by a chill wind, the 40-year-old nodded toward a bend in the river and said: “Without that water, there’s nothing for people to do here.”

But he credited the EPA for slowly making things better.

A few years ago, detection meters found stretches of the river near his home to be as acidic as soda pop. Last summer, Miller noticed a few little bugs in the water. And in the fall, a minnow.

Some day, he said, “we’ll go for a swim.”